Virginia | 1-1070 | 13-1872319 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
190 Carondelet Plaza, Suite 1530 Clayton, MO (Address of principal executive offices) | 63105-3443 (Zip Code) |
(314) 480-1400 (Registrant's telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) Exhibit No. | Exhibit |
99.1 | Press Release announcing fourth quarter 2014 earnings, dated February 5, 2015. |
OLIN CORPORATION | |||
By: | /s/ George H. Pain | ||
Name: | George H. Pain | ||
Title: | Senior Vice President, General Counsel and Secretary |
Exhibit No. | Exhibit |
99.1 | Press Release announcing fourth quarter 2014 earnings, dated February 5, 2015. |
• | sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, vinyls, urethanes, and pulp and paper, and the migration by United States customers to low-cost foreign locations; |
• | the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products; |
• | economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits; |
• | new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities; |
• | changes in legislation or government regulations or policies; |
• | higher-than-expected raw material and energy, transportation, and/or logistics costs; |
• | costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; |
• | unexpected litigation outcomes; |
• | the failure or an interruption of our information technology systems; |
• | the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards; |
• | adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital; |
• | weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior revolving credit facility and certain tax-exempt bonds; |
• | the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan; and |
• | an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service. |
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
(In millions, except per share amounts) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales | $ | 499.8 | $ | 562.1 | $ | 2,241.2 | $ | 2,515.0 | ||||||||
Operating Expenses: | ||||||||||||||||
Cost of Goods Sold | 421.9 | 469.7 | 1,853.2 | 2,033.7 | ||||||||||||
Selling and Administration | 41.9 | 55.7 | 170.4 | 190.0 | ||||||||||||
Restructuring Charges(b) | 11.2 | 1.4 | 15.7 | 5.5 | ||||||||||||
Other Operating Income (Expense)(c) | 0.7 | (0.6 | ) | 1.5 | 0.7 | |||||||||||
Operating Income | 25.5 | 34.7 | 203.4 | 286.5 | ||||||||||||
Earnings of Non-consolidated Affiliates | 0.3 | 0.4 | 1.7 | 2.8 | ||||||||||||
Interest Expense(d) | 6.8 | 9.9 | 43.8 | 38.6 | ||||||||||||
Interest Income | 0.4 | 0.3 | 1.3 | 0.6 | ||||||||||||
Other Income (Expense)(e) | — | 5.0 | 0.1 | (1.3 | ) | |||||||||||
Income from Continuing Operations before Taxes | 19.4 | 30.5 | 162.7 | 250.0 | ||||||||||||
Income Tax Provision | 6.6 | 5.8 | 57.7 | 71.4 | ||||||||||||
Income from Continuing Operations | 12.8 | 24.7 | 105.0 | 178.6 | ||||||||||||
Income from Discontinued Operations, Net(f) | — | — | 0.7 | — | ||||||||||||
Net Income | $ | 12.8 | $ | 24.7 | $ | 105.7 | $ | 178.6 | ||||||||
Net Income Per Common Share: | ||||||||||||||||
Basic Income Per Common Share: | ||||||||||||||||
Income from Continuing Operations | $ | 0.16 | $ | 0.31 | $ | 1.33 | $ | 2.24 | ||||||||
Income from Discontinued Operations, Net | — | — | 0.01 | — | ||||||||||||
Net Income | $ | 0.16 | $ | 0.31 | $ | 1.34 | $ | 2.24 | ||||||||
Diluted Income Per Common Share: | ||||||||||||||||
Income from Continuing Operations | $ | 0.16 | $ | 0.31 | $ | 1.32 | $ | 2.21 | ||||||||
Income from Discontinued Operations, Net | — | — | 0.01 | — | ||||||||||||
Net Income | $ | 0.16 | $ | 0.31 | $ | 1.33 | $ | 2.21 | ||||||||
Dividends Per Common Share | $ | 0.20 | $ | 0.20 | $ | 0.80 | $ | 0.80 | ||||||||
Average Common Shares Outstanding - Basic | 77.9 | 79.5 | 78.6 | 79.9 | ||||||||||||
Average Common Shares Outstanding - Diluted | 78.8 | 80.5 | 79.7 | 80.9 |
(a) | Unaudited. |
(b) | Restructuring charges for the three months and year ended December 31, 2014 included $10.0 million associated with permanently closing a portion of the Becancour, Canada facility. Restructuring charges for the three months and years ended December 31, 2014 and 2013 were also associated with exiting the use of mercury cell technology in the chlor alkali manufacturing process and the ongoing relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS. |
(c) | Other operating income (expense) for the year ended December 31, 2014 included a gain of $1.0 million for the resolution of a contract matter. Other operating income (expense) for the year ended December 31, 2013 included a gain of $1.5 million on the sale of two former manufacturing sites. |
(d) | Interest expense for the year ended December 31, 2014 included $9.5 million for the call premium and the write-off of unamortized deferred debt issuance costs and unamortized discount associated with the redemption of our $150 million 8.875% senior notes, which would have matured on August 15, 2019. Interest expense for the year ended December 31, 2013 was reduced by capitalized interest of $1.1 million. |
(e) | Other income (expense) included $1.5 million of expense for our earn out liability from the SunBelt acquisition for the three months ended December 31, 2013 and $7.9 million for the year ended December 31, 2013. Other income (expense) for the three months and year ended December 31, 2013 also included a gain of $6.5 million on the sale of our equity interest in a bleach joint venture. |
(f) | Income from discontinued operations, net for the year ended December 31, 2014 included a $0.7 million after tax gain for the favorable resolution of certain indemnity obligations related to our Metals business sold in 2007. |
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
(In millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Sales: | ||||||||||||||||
Chlor Alkali Products | $ | 309.6 | $ | 322.2 | $ | 1,305.6 | $ | 1,412.3 | ||||||||
Chemical Distribution | 72.4 | 80.7 | 293.8 | 406.4 | ||||||||||||
Winchester | 147.2 | 178.4 | 738.4 | 777.6 | ||||||||||||
Intersegment Sales Elimination(b) | (29.4 | ) | (19.2 | ) | (96.6 | ) | (81.3 | ) | ||||||||
Total Sales | $ | 499.8 | $ | 562.1 | $ | 2,241.2 | $ | 2,515.0 | ||||||||
Income (Loss) from Continuing Operations before Taxes: | ||||||||||||||||
Chlor Alkali Products(c) | $ | 28.8 | $ | 30.7 | $ | 130.1 | $ | 203.8 | ||||||||
Chemical Distribution | — | — | — | 9.7 | ||||||||||||
Winchester | 17.4 | 34.1 | 127.3 | 143.2 | ||||||||||||
Corporate/Other: | ||||||||||||||||
Pension Income(d) | 8.2 | 6.6 | 32.4 | 26.6 | ||||||||||||
Environmental Expense(e) | (1.9 | ) | (5.3 | ) | (8.2 | ) | (10.2 | ) | ||||||||
Other Corporate and Unallocated Costs | (16.2 | ) | (29.0 | ) | (62.3 | ) | (79.0 | ) | ||||||||
Restructuring Charges(f) | (11.2 | ) | (1.4 | ) | (15.7 | ) | (5.5 | ) | ||||||||
Other Operating Income (Expense)(g) | 0.7 | (0.6 | ) | 1.5 | 0.7 | |||||||||||
Interest Expense(h) | (6.8 | ) | (9.9 | ) | (43.8 | ) | (38.6 | ) | ||||||||
Interest Income | 0.4 | 0.3 | 1.3 | 0.6 | ||||||||||||
Other Income (Expense)(i) | — | 5.0 | 0.1 | (1.3 | ) | |||||||||||
Income from Continuing Operations before Taxes | $ | 19.4 | $ | 30.5 | $ | 162.7 | $ | 250.0 |
(a) | Unaudited. |
(b) | Intersegment sales elimination represents the sale of caustic soda, bleach, potassium hydroxide, and hydrochloric acid between Chemical Distribution and Chlor Alkali Products, at prices that approximate market. |
(c) | Earnings of non-consolidated affiliates are included in the Chlor Alkali Products segment results consistent with management's monitoring of the operating segments. The earnings from non-consolidated affiliates were $0.3 million and $0.4 million for the three months ended December 31, 2014 and 2013, respectively, and $1.7 million and $2.8 million for the years ended December 31, 2014 and 2013, respectively. During October 2013, we sold our equity interest in a bleach joint venture. |
(d) | The service cost and the amortization of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in Corporate/Other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses. |
(e) | Environmental expense for the three months and year ended December 31, 2014 included $1.4 million of recoveries from third parties for costs incurred and expensed in prior periods. Environmental expense for the year ended December 31, 2013 included $1.3 million of recoveries from third parties for costs incurred and expensed in prior periods. |
(f) | Restructuring charges for the three months and year ended December 31, 2014 included $10.0 million associated with permanently closing a portion of the Becancour, Canada facility. Restructuring charges for the three months and years ended December 31, 2014 and 2013 were also associated with exiting the use of mercury cell technology in the chlor alkali manufacturing process and the ongoing relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS. |
(g) | Other operating income (expense) for the year ended December 31, 2014 included a gain of $1.0 million for the resolution of a contract matter. Other operating income (expense) for the year ended December 31, 2013 included a gain of $1.5 million on the sale of two former manufacturing sites. |
(h) | Interest expense for the year ended December 31, 2014 included $9.5 million for the call premium and the write-off of unamortized deferred debt issuance costs and unamortized discount associated with the redemption of our $150 million 8.875% senior notes, which would have matured on August 15, 2019. Interest expense for the year ended December 31, 2013 was reduced by capitalized interest of $1.1 million. |
(i) | Other income (expense) included $1.5 million of expense for our earn out liability from the SunBelt acquisition for the three months ended December 31, 2013 and $7.9 million for the year ended December 31, 2013. Other income (expense) for the three months and year ended December 31, 2013 also included a gain of $6.5 million on the sale of our equity interest in a bleach joint venture. |
December 31, | December 31, | |||||||
(In millions, except per share data) | 2014 | 2013 | ||||||
Assets: | ||||||||
Cash & Cash Equivalents | $ | 256.8 | $ | 307.8 | ||||
Accounts Receivable, Net | 263.1 | 280.1 | ||||||
Income Taxes Receivable | 21.6 | 1.9 | ||||||
Inventories | 210.1 | 186.5 | ||||||
Current Deferred Income Taxes | 54.2 | 50.4 | ||||||
Other Current Assets | 10.3 | 13.2 | ||||||
Total Current Assets | 816.1 | 839.9 | ||||||
Property, Plant and Equipment (Less Accumulated Depreciation of $1,330.7 and $1,259.1) | 931.0 | 987.8 | ||||||
Prepaid Pension Costs | — | 1.7 | ||||||
Restricted Cash | — | 4.2 | ||||||
Deferred Income Taxes | 12.5 | 9.0 | ||||||
Other Assets | 191.4 | 213.1 | ||||||
Goodwill | 747.1 | 747.1 | ||||||
Total Assets | $ | 2,698.1 | $ | 2,802.8 | ||||
Liabilities and Shareholders' Equity: | ||||||||
Current Installments of Long-Term Debt | $ | 16.4 | $ | 12.6 | ||||
Accounts Payable | 146.8 | 148.7 | ||||||
Income Taxes Payable | 0.2 | 1.7 | ||||||
Accrued Liabilities | 214.3 | 244.5 | ||||||
Total Current Liabilities | 377.7 | 407.5 | ||||||
Long-Term Debt | 658.7 | 678.4 | ||||||
Accrued Pension Liability | 182.0 | 115.4 | ||||||
Deferred Income Taxes | 107.1 | 117.6 | ||||||
Other Liabilities | 359.3 | 382.8 | ||||||
Total Liabilities | 1,684.8 | 1,701.7 | ||||||
Commitments and Contingencies | ||||||||
Shareholders' Equity: | ||||||||
Common Stock, Par Value $1 Per Share, Authorized 120.0 Shares: Issued and Outstanding 77.4 Shares (79.4 in 2013) | 77.4 | 79.4 | ||||||
Additional Paid-In Capital | 788.3 | 838.8 | ||||||
Accumulated Other Comprehensive Loss | (443.1 | ) | (365.1 | ) | ||||
Retained Earnings | 590.7 | 548.0 | ||||||
Total Shareholders' Equity | 1,013.3 | 1,101.1 | ||||||
Total Liabilities and Shareholders' Equity | $ | 2,698.1 | $ | 2,802.8 |
(a) | Unaudited. |
Years Ended December 31, | ||||||||
(In millions) | 2014 | 2013 | ||||||
Operating Activities: | ||||||||
Net Income | $ | 105.7 | $ | 178.6 | ||||
Earnings of Non-consolidated Affiliates | (1.7 | ) | (2.8 | ) | ||||
Gains on Disposition of Non-consolidated Affiliate | — | (6.5 | ) | |||||
Gains on Disposition of Property, Plant and Equipment | (1.1 | ) | (0.4 | ) | ||||
Stock-Based Compensation | 5.1 | 8.8 | ||||||
Depreciation and Amortization | 139.1 | 135.3 | ||||||
Deferred Income Taxes | 31.0 | 12.4 | ||||||
Write-off of Equipment and Facility Included in Restructuring Charges | 3.3 | — | ||||||
Qualified Pension Plan Contributions | (0.8 | ) | (1.0 | ) | ||||
Qualified Pension Plan Income | (28.5 | ) | (24.1 | ) | ||||
Changes in: | ||||||||
Receivables | 25.8 | 18.9 | ||||||
Income Taxes Receivable/Payable | (27.8 | ) | 0.4 | |||||
Inventories | (23.6 | ) | 8.6 | |||||
Other Current Assets | 1.7 | 0.7 | ||||||
Accounts Payable and Accrued Liabilities | (38.5 | ) | 1.0 | |||||
Other Assets | 5.2 | 1.3 | ||||||
Other Noncurrent Liabilities | (33.2 | ) | (14.5 | ) | ||||
Other Operating Activities | (2.5 | ) | 0.3 | |||||
Net Operating Activities | 159.2 | 317.0 | ||||||
Investing Activities: | ||||||||
Capital Expenditures | (71.8 | ) | (90.8 | ) | ||||
Proceeds from Sale/Leaseback of Equipment | — | 35.8 | ||||||
Proceeds from Disposition of Property, Plant and Equipment | 5.6 | 4.6 | ||||||
Distributions from Affiliated Companies, Net | — | 1.5 | ||||||
Restricted Cash Activity | 4.2 | 7.7 | ||||||
Other Investing Activities | 0.3 | (2.6 | ) | |||||
Net Investing Activities | (61.7 | ) | (43.8 | ) | ||||
Financing Activities: | ||||||||
Long-Term Debt: | ||||||||
Borrowings | 150.0 | — | ||||||
Repayments | (162.4 | ) | (23.7 | ) | ||||
Earn Out Payment – SunBelt | (14.8 | ) | (17.1 | ) | ||||
Common Stock Repurchased and Retired | (64.8 | ) | (36.2 | ) | ||||
Stock Options Exercised | 6.6 | 8.8 | ||||||
Excess Tax Benefits from Stock-Based Compensation | 1.1 | 1.6 | ||||||
Dividends Paid | (63.0 | ) | (64.0 | ) | ||||
Deferred Debt Issuance Costs | (1.2 | ) | — | |||||
Net Financing Activities | (148.5 | ) | (130.6 | ) | ||||
Net (Decrease) Increase in Cash and Cash Equivalents | (51.0 | ) | 142.6 | |||||
Cash and Cash Equivalents, Beginning of Year | 307.8 | 165.2 | ||||||
Cash and Cash Equivalents, End of Year | $ | 256.8 | $ | 307.8 |
(a) | Unaudited. |
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||
(In millions) | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Reconciliation of Income from Continuing Operations to Adjusted EBITDA: | ||||||||||||||||
Income from Continuing Operations | $ | 12.8 | $ | 24.7 | $ | 105.0 | $ | 178.6 | ||||||||
Add Back: | ||||||||||||||||
Interest Expense | 6.8 | 9.9 | 43.8 | 38.6 | ||||||||||||
Interest Income | (0.4 | ) | (0.3 | ) | (1.3 | ) | (0.6 | ) | ||||||||
Income Tax Expense | 6.6 | 5.8 | 57.7 | 71.4 | ||||||||||||
Depreciation and Amortization | 34.8 | 34.1 | 139.1 | 135.3 | ||||||||||||
EBITDA | 60.6 | 74.2 | 344.3 | 423.3 | ||||||||||||
Deduct: | ||||||||||||||||
Other Income (Expense)(b) | — | 5.0 | 0.1 | (1.3 | ) | |||||||||||
Adjusted EBITDA | $ | 60.6 | $ | 69.2 | $ | 344.2 | $ | 424.6 |
(a) | Unaudited. |
(b) | Other income (expense) included $1.5 million of expense for our earn out liability from the SunBelt acquisition for the three months ended December 31, 2013 and $7.9 million for the year ended December 31, 2013. Other income (expense) for the three months and year ended December 31, 2013 also included a gain of $6.5 million on the sale of our equity interest in a bleach joint venture. |